Argentina makes biggest debt default in history

ARGENTINA inaugurated its third president in four days yesterday and he immediately declared the biggest debt default in history, halting payments on the £94 billion the country owes.

Adolfo Rodriguez Saa said the suspension - a repayment of £4.2 billion is due next year - was aimed at freeing up funds to create a million jobs and finance social development programmes.

Mr Saa, a 54-year-old lawyer nicknamed El Adolfo, ruled out devaluing the peso or converting to US dollars. Instead, he will introduce a new currency to operate alongside the peso, which has been pegged at one to the dollar for a decade.

He promised to negotiate with international banks and said the suspension would not be permanent.

Yesterday, Mr de la Rua was barred from leaving the country pending an investigation into the riots.

Mr Saa, a jovial but hard-talking millionaire businessman, has been governor of the small desert province of San Luis for 18 years, modernising it and turning it into the "cyber-centre" of Argentina, while the rest of the country scrambled to fill gaping budget holes.

The colourful populist from a well-known Argentine political family has built thousands of homes for the poor and improved schools in his province.

In 1993, he was hit by scandal when he was kidnapped and filmed having sex with one of his aides, Esther Sesin. She was later jailed for 12 years for various crimes including incitement to kidnap.

Mr Saa was badly beaten during the kidnapping and spent two days in hospital. He claimed he had been forced to have sex.

He will be interim president until March when a definitive president will be elected to complete the final two years of Mr de la Rua's term.